Will High Gas Prices Save the Environment?

Industrial civilization has been built on easy access to cheap energy. Coal for steam and electricity as well as oil and gas to feed internal combustion engines in our vehicles and chemical plants, have shaped every part of our lives: from homes, workplaces and cities to vacations and food. Non-renewable, and until-now cheap, fossil fuels grease the wheels of most economic activity. Replacing them won’t be easy. Which is why even as prices soar, demand drops relatively slowly.

Worse, high prices prompt development of even more environmentally-damaging energy sources. A case in point is the explosive growth of the Alberta tar sands. They used to be too expensive because it takes triple the energy, and creates triple the amount of heat-trapping gases, to mine and refine a barrel of oil from the tar sands compared to conventional oil. Even dirtier and costlier are the coal-to-gas plants. At $130 per barrel, however, these projects are getting investors’ nods of approval.

Smart consumers may be buying more efficient vehicles to defend their pocketbook, but we risk cancelling out the avoided pollution from more efficient vehcles by the ever-more energy-intensive fuel going into the tank. Avoiding the car altogether is tough if there’s no bus you can take and your neighbourhood has been designed for the car. So in the absence of some serious controls on urban sprawl and investments in public transit, a lot of  people will just have to suck it up and pay more at the pump.

And it’s not just about oil. Old King Coal is making a comeback as industries switch from natural gas, which is cleaner than coal but whose price is rising, back to the fuel of choice for the 19th century.

The challenge and opportunity is to get to a 21st century energy system based on the efficient use of renewable energy. Getting there fast enough to prevent dangerous climate change is going to require a concerted effort comparable to fighting the Second World War and there will undoubtedly be some withdrawal pains.  It’s trite but true — it will require the leadership and political will to deploy the variety of tools, including price signals, regulations, education, and green investments to make all fossil fuels equally unpopular.  

That’s a hard sell to the skilled auto-workers whose jobs are disappearing as fast as the market for the gas guzzling vehicles. Both trends are consequences of a corporate strategy backed by public subsidies that was built on the assumption of an unending supply of cheap gas.

We can’t ignore the new reality, but a potential payoff is to get them back to work in ‘green collar’ jobs building the plug-in hybrid vehicles and solar panels we need to fight climate change. And we can use some of the revenue from pricing carbon to make the homes of seniors living on a fixed income, who are having trouble paying their home heating bills, more energy efficient and hence affordable while creating a good job for a young person installing insulation and solar hot water heaters.

Constraining carbon and making it part of the bottom line for business and consumers — through well-designed carbon taxes and/or hard caps on industrial emissions — is a key part of the solution. This will ensure that even dirtier fossil fuels don’t fill the gap as easy-to-access oil and gas disappear. It also aligns our increasingly eco-responsible consciences with our oil-stressed pocketbooks, which any economist will tell you is a step in the right direction. Together they create a powerful force for change that government and industry would be foolish to ignore.

by Keith Stewart